All posts tagged VimpelCom

Norwegian telecom operator Telenor is weighing the potential sale of its stake in Russia’s VimpelCom after rival shareholder Altimo acquired more voting rights in a recent deal, effectively seizing control of the company.

“We have noted that Altimo now has taken full control over VimpelCom, and that has prompted us to take a more pragmatic stance about our own ownership,” Telenor spokesman Dag Melgaard said Thursday, without elaborating.

The latest chapter in Telenor’s prolonged ownership conflict with rival shareholder Altimo–a unit of Russian conglomerate Alfa Group–highlights the difficulty of doing business in Russia and comes barely a week after BP said it would exit its fractured joint venture TNK-BP after its near 10-year partnership soured.

Altimo and Telenor have been vying for control of the fast-growing operator over the last two years and Altimo earlier this week increased its voting stake in VimpelCom to 47.9% from 41.9%. Telenor has 39.5% of the votes in Vimpelcom and 35.7% of the capital and had proposed both owners hold an equal number of votes in the company as a way of resolving the ownership dispute over the strategic direction of the mobile operator.

Mr. Melgaard said Telenor hasn’t yet taken any steps to reduce its roughly $6.4 billion stake in VimpelCom before the next shareholder meeting, which is expected to take place before the end of 2012.

The Norwegian company, which owns around 40% of VimpelCom, has opposed the deal claiming that it doesn’t make any strategic or financial sense, but its three nominees on VimpelCom’s nine-man board were voted down by the other directors, including the three controlled by Alfa Group.

While a tie-up with Sawiris’ Wind Telecom would boost VimpelCom’s position in African and Asian markets, in line with its growth strategy, analysts agree that the deal may be a negative for Telenor’s shareholders. This is because the acquisition would dilute Telenor’s voting rights at VimpelCom, meaning that asset would turn more risky, and it would also expose the Norwegian company to Algerian operations which run the risk of being nationalized, analyst Arild Nysaether at Norway’s Fondsfinans said in a recent interview.

In an attempt to block the acquisition, Telenor will try to convince VimpelCom’s minority owners, who hold around 20% of the company, to vote against the proposal at a shareholders meeting on March 17, press spokesman Dag Melgaard said Monday.

In Algeria, Russia’s proverbial treatment of foreign investors may have finally met its match.

In Moscow, companies are used to getting the business version of the “veniki”, a birch twig used to beat the backs of sauna customers to enhance blood circulation.

Royal Dutch Shell with Russian gas giant Gazprom, and then BP with its oligarchic partners in TNK-BP both got a robust “veniki” treatment. But you get used to it, and despite the bruising, they all came back for more of Russia’s huge oil and gas reserves.

The Algerians don’t do “veniki.” Instead, they do “chorba,” a spicy soup with an intensity and richness that can leave the taste buds of visitors bewildered. And now they are giving the Russians a taste of their local broth.

In recent months, Russian oligarchs have tried to buy two of Algeria’s most strategic assets and, despite Kremlin support, have faced stiff resistance so far.

Attempts by Russian telecoms firm VimpelCom to buy Middle-East mobile giant Orascom Telecom have hit a snag in the North African nation. Since its launch in 2002, Djezzy, Orascom’s Algerian unit, has turned into a cash cow and the market leader in the country, but the government doesn’t want it to go with a foreign buyer.

When Russian President Dmitry Medvedev and his business delegation came to plead for the sale in October, his Algerian counterpart Abdelaziz Bouteflika wouldn’t have any of it…

Call it coincidence, but ever since the sequel to iconic ’80s flick Wall Street was released in the Middle East, corporate activity around these parts has sky rocketed.

The Gordon Gecko effect, you could say, is in full swing.

In the space of two weeks we’ve seen the United Arab Emirates’ biggest mobile-phone operator, Emirates Telecommunications Corp., or Etisalat, table an $11.7 billion bid for 46% of Kuwait’s Mobile Telecommunications Co., or Zain.

Telenor and Alfa, owners of more than three quarters of VimpelCom’s shares, made peace last autumn. They then launched an offer to combine the company with Ukraine’s largest mobile operator, which they jointly owned.

Although minority shareholders may have thought the terms were unfair, most either tendered their shares in support of the deal or sold them to others who supported the deal. Their stock is now worth $14.84 per ADR, but VimpelCom has offered to pay around $19 per ADR to the other minority shareholders — representing 2.13% of all stock — who ignored the advice and didn’t tender their shares.

To get the deal through, Telenor and Alfa needed support from four fifths of VimpelCom’s shareholders. Most brokerages said the terms of the offer favored Telenor and Alfa over VimpelCom’s minority investors, but discouraged their clients from opposing the offer, since dissenting investors could be squeezed out on unfair terms.

In their offer documents Alfa and Telenor said if more than four fifths of minority shareholders supported the deal, those left over would be bought out “in a mandatory squeeze-out at a later stage at a price determined under Russian law” . [Read Vimpel's statement here.]

Introducing William Mauldin, the new deputy bureau chief of the merged Wall Street Journal/Dow Jones Newswires bureau in Moscow.

Doing business in Russia is as difficult as ever. You just have to look at the difficulties mobile operators Teliasonera of Sweden and Russia’s Alfa Group are experiencing.

In addition to a combative shareholder in Turkey and the regulatory caprice of the Kremlin, Sweden’s Teliasoneraand Russia’s Alfa Group are facing another obstacle to their mobile-telephone tie-up: Billionaire Alisher Usmanov, the second biggest shareholder in British football club Arsenal, and his influential business daily.

Kommersant today devotes nearly 2,000 words to an interview with the head of Usmanov-controlled Telecominvest, which owns 31% of MegaFon, one of Russia’s three big mobile companies. Alfa and TeliaSonera yesterday said they would unite their telecom shares in MegaFon and Turkey’s Turkcell,to form a new, as yet unnamed company that would incorporate outside Russia and seek listing on the New York Stock Exchange.

“The devil is always in the details. We believe that this agreement is a ‘paper tiger,’” said Ivan Streshinsky, general director of Telecominvest, controlled by Usmanov’s AF Telecom, in the Kommersant interview.

Usmanov sees the Kremlin’s Svyazinvest telecom holding as a better partner, and he has reportedly discussed swapping his MegaFon stake for part of Rostelecom, the national long-distance operator.